In a recent poll we conducted with brokers, the specialist mortgage market is set for continued growth over the next 12 months, with 80% expecting to write more specialist residential business in 2022 than in any previous year.
David Binney is commercial manager of Norton Home Loans
In a recent poll we conducted with brokers, the specialist mortgage market is set for continued growth over the next 12 months, with 80% expecting to write more specialist residential business in 2022 than in any previous year.
The poll, carried out during a Knowledge Bank webinar, also found that 43% of brokers have reported an uptick in adverse credit cases since the start of the pandemic, illustrating a trend that looks set to continue as the financial ramifications of COVID-19 start to play out.
For many people, job losses, salary cuts, multiple income streams, payment arrears and the escalating cost of living such as tax hikes, rising energy costs and soaring consumer price inflation has started to impact on household finances.
Some people have run up debt and defaulted on payments as a result of the economic challenges brought about by the pandemic, while others have had to change the way they work by starting new businesses, moving to part-time employment or taking on multiple jobs.
In many cases, these people are often turned away by mainstream lenders because they have a low credit score, missed payments, CCJs or defaults on their credit profile.
However, these factors should not prevent them from buying a home and in some cases can even be unknown to the borrower due to a house move or fraudulent activity.
Even those with more serious and long-term adverse credit ratings such as secured loan arrears and bankruptcy can be catered for, as many specialist mortgage lenders take a view of the bigger picture by assessing each case on its own merits and tailoring solutions for those borrowers who fail to meet the strict criteria of high street lenders.
While there is no denying the impact of the COVID-19 pandemic on household finances, it is also important to note that the increase in specialist mortgage business is not entirely a direct result of the pandemic, nor is it just about adverse credit or irregular and unusual incomes.
Borrowers looking to buy unusual properties, borrow into retirement, or those with varying buy-to-let requirements also fit the mould and the experience of brokers is that they are seeing more of these complex cases than ever before.
In fact, the survey showed that unusual property types caused regular issues when trying to place cases, with the most difficult being timber or steel framed construction, according to 53% of brokers.
Freehold flats also proved problematic for 41% of brokers, while flat roofs and flats with balcony access were cited as difficult to place by 29% of brokers.
Similarly, right-to-buy and ex-local authority properties were also problematic in 12% and 18% of cases. All these property types are perfectly viable house purchase options for many borrowers yet can still prove difficult to finance in the mainstream mortgage market. And this is where specialist lending comes into its own.
The fact is that placing a specialist mortgage doesn’t need to be complicated. It does however, require more individual attention, and it is here that we continually help brokers struggling to place the mortgage applications of non-mainstream clients.
By assessing each application individually and tailoring solutions to address the needs of each individual, specialist lenders can work directly with brokers to deliver a variety of product solutions to a growing number of non-mainstream borrowers and help brokers tap into this ever-growing sector of the mortgage market.
